Just for Lowell an article written in TWO THOUSAND

Must be a right-wing plot. Nobody could have foreseen the mess that the CRA would cause. Could they?

“The Clinton administration has turned the Community Reinvestment Act, a once-obscure and lightly enforced banking regulation law, into one of the most powerful mandates shaping American cities—and, as Senate Banking Committee chairman Phil Gramm memorably put it, a vast extortion scheme against the nation’s banks. Under its provisions, U.S. banks have committed nearly $1 trillion for inner-city and low-income mortgages and real estate development projects, most of it funneled through a nationwide network of left-wing community groups, intent, in some cases, on teaching their low-income clients that the financial system is their enemy and, implicitly, that government, rather than their own striving, is the key to their well-being.” [Remember, this Prophet was writing this nine years ago!]

….”There is no more important player in the CRA-inspired mortgage industry than the Boston-based Neighborhood Assistance Corporation of America. Chief executive Bruce Marks has set out to become the Wal-Mart of home mortgages for lower-income households. Using churches and radio advertising to reach borrowers, he has made NACA a brand name nationwide, with offices in 21 states, and he plans to double that number within a year. With “delegated underwriting authority” from the banks, NACA itself—not the banks—determines whether a mortgage applicant is qualified, and it closes sales right in its own offices. It expects to close 5,000 mortgages next year, earning a $2,000 origination fee on each. Its annual budget exceeds $10 million.

“Marks, a Scarsdale native, NYU MBA, and former Federal Reserve employee, unabashedly calls himself a “bank terrorist“—his public relations spokesman laughingly refers to him as “the shark, the predator,” and the NACA newspaper is named the Avenger. They’re not kidding: bankers so fear the tactically brilliant Marks for his ability to disrupt annual meetings and even target bank executives’ homes that they often call him to make deals before they announce any plans that will put them in CRA’s crosshairs. A $3 billion loan commitment by Nationsbank, for instance, well in advance of its announced merger with Bank of America, “was a preventive strike,” says one NACA spokesman.

Marks is unhesitatingly candid about his intent to use NACA to promote an activist, left-wing political agenda. NACA loan applicants must attend a workshop that celebrates—to the accompaniment of gospel music—the protests that have helped the group win its bank lending agreements. If applicants do buy a home through NACA, they must pledge to assist the organization in five “actions” annually—anything from making phone calls to full-scale “mobilizations” against target banks, “mau-mauing” them, as sixties’ radicals used to call it. “NACA believes in aggressive grassroots advocacy,” says its Homebuyer’s Workbook.”

And the Dumbo-eared One and his buddies at ACORN climbed right in and “mau-maued” banks along with the best of them.

And those ultra conservatives–NOT–at Washington Post noted that FANNIE MAE contributed to the problem:

“In January 2007, as years of loose mortgage lending were about to send the nation’s housing market into devastating decline, Fannie Mae chief executive Daniel H. Mudd wrote a confidential memo to his board.”

“Discussing the company’s successes, Mudd said one of Fannie Mae’s achievements in 2006 was expanding its involvement in the market for subprime and other nontraditional mortgages. He called it a step “toward optimizing our business.”

“A month later, Fannie Mae outlined plans to further expand its activities in the subprime market. The company recognized the already weak performance of subprime loans but predicted that they would get better in 2007, according to another Fannie Mae document.”

And looky, looky at what Dennis Kucinich (another ultra conservative–NOT) said about the Execs at Fannie Mae:

“The facts show, gentlemen, that many of you at this table did know the risks and that you were warned not to take them, and that you ignored your internal adviser, your chief risk officer,” Rep. Dennis Kucinich, D-Ohio, told the executives in presence.”

“Their [Fannie Mae’s managers] own risk managers raised warning after warning about the dangers of investing heavily in the subprime and alternative mortgage market. But these warnings were ignored” by the two chief executives, said Waxman. “Their irresponsible decisions are now costing the taxpayers billions of dollars.”

AND WHY DID FANNIE MAE INCREASE RISKY LOANS? I DUNNO. PERHAPS IF YOU READ WHAT THE NY DAILY NEWS WROTE BACK IN 1999 (ten years ago, for you boys and girls keeping score at home):

“Fannie Mae, the nation’s biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.

“In addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called subprime borrowers. These borrowers whose incomes, credit ratings and savings are not good enough to qualify for conventional loans, can only get loans from finance companies that charge much higher interest rates — anywhere from three to four percentage points higher than conventional loans.”

And who ran FANNIE MAE back in its glory days when it was making all those sub-prime loans and committing all that fraud? Why, it was Democrats, who were appointed by Democrat President Bubba Clinton. Harold Raines and Jamie Gorelick, among others.

7 responses to “Just for Lowell an article written in TWO THOUSAND”

Good article John, thank you. Provides some good historical perspective about how we have gotten to this point.

Interesting from the same article:
“Home ownership has, in fact, exploded among minorities during the economic boom of the 1990’s. The number of mortgages extended to Hispanic applicants jumped by 87.2 per cent from 1993 to 1998, according to Harvard University’s Joint Center for Housing Studies. During that same period the number of African Americans who got mortgages to buy a home increased by 71.9 per cent and the number of Asian Americans by 46.3 per cent.”

Couple that with:
“From 2001 to 2005, the United States saw the largest housing boom since the 1950s. Low interest rates coupled with new-found wealth from growing technology industries helped usher in a wave of home restoration and new construction . Eager house hunters and investors bought and sold real estate like never before. Along with these factors, lenders used clever loans to allow just about any gainfully employed individual to realize their dream of owning a home. One such practice is the interest-only (IO) loan.”

and:

“The IO loan has actually been around for a long time, having its first heyday in the 1920s. In those days, lenders handed out IO loans that had no set term, allowing homeowners to pay only on the interest for the life of the loan. At the end of the loan, the full amount would be due, and borrowers would­ typically refinance. Americans were keen to invest as much money as possible in the rising stock market, and the IO loan freed up the cash to do so. What no one could predict was the market crash of 1929. Homeowners saw their investments vanish and suddenly couldn’t afford to pay their monthly house note. As a result, the foreclosure rate soared and many once-stable families found themselves homeless. This had a devastating impact on the economy and, coupled with the market crash, led to The Great Depression .” source article with links

When I ran for House of Delegates in 2003, and again in 2005, I attempted to point out that personal bankruptcies due to credit card debt had increased by some 600% in 2003 alone.

There are a number of things that have contributed to the situation in which we now find ourselves John. Many people, both Republican and Democrat, have contributed to this situation.

The question now, for both of us, Republican and Democrat, as Americans… Is, “What are we going to do about it?”

I just spent a while writing to contribute to this discussion you’ve provided John. I hit submit, and it disappeared… I’m sorry, I’d do it again but I need to get to bed. I’ll try to recreate my post later.
Thank you for starting this thread on a very important issue.

I believe that the biggest problem was Fannie and Freddie being run by idiots as a for profit enterprise. Either don’t back it with taxpayer money, or don’t let its leaders get huge bonuses depending upon how much profit they made. Democrats who were appointed by Democrats used Fannie as a personal piggy bank to scoop up tens of millions of dollars in bonuses for themselves by purchasing toxic loans. Back in my day, Fannie Mae loans were HARDER to qualify for than from an ordinary bank. When FANNIE and FREDDIE let down their qualifications, it caused all the lenders to drop theirs too. Why should the lenders worry about qualifications? Why worry if the borrower will repay it? After all, the lenders would just sell the loans to Fannie or Freddie. Sorta like the opposite of the old Mikey commercial: Fannie and Freddie witll buy it. They’ll buy ANYTHING!

“Marks is unhesitatingly candid about his intent to use NACA to promote an activist, left-wing political agenda.”

Doubtless – but that this is somehow seen as negative strikes me as silly. President Bush was unhesitatingly candid about his intent to use the Patriot Act to promote an authoritarian, right-wing political agenda; is that a “wow” moment?

I feel much more comfortable when someone simply states his or her intentions for what they are. It’s much harder when people claim one thing and do something completely different.

As an addendum to previous, may I say that it runs a little hollow at this point for otherwise-thinking people to continually blame everything that ever went wrong with America on the Clinton administration.

Sure, Clinton and his policies can be blamed for some things. But remember that six of Clinton’s eight years were spent with a Republican-controlled Congress. The next six years–the first six of the Bush administration–were also spent with a Republican-controlled Congress.

So, let’s stop kidding ourselves. From 2001-2006, Congress rubber-stamped virtually everything that Bush asked for, so there is nothing that Clinton did that Bush could not have undone. Trace the origins of bad policy to Clinton if you like, but can you give me any reason other that complete incompetence as to why a dozen years of Republican control in both houses didn’t change course?

Jamie, thanks for commenting! I would give you first the reason for pointing this out that the liberals ALL point to Bush and Republicans as the cause of all our problems. I would say that the cause of the problems are bipartisan in nature, but blame of the cause falls too much on the Pubs.

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